Monday, June 6, 2011Massive Drain of Comex silver/almost all gold and silver at comex

[southfork]

Monday, June 6, 2011Massive Drain of Comex silver/almost all gold and silver at comex settled by paper
Good evening Ladies and Gentlemen:

There is a lot of stuff happening today so please read everything today very carefully.

Gold closed today up $4.80 to $1546.50. Silver which for most of the day traded up by over one dollar
lost some of its steam late in the comex session to close at $36.77 up 58 cents. It had traded well north of 37.00 dollars during the early comex session.

Let us go to the comex and see how trading fared today.
First the gold comex:

The total gold comex OI rose today by 4311 contracts from 503,511 to 507,822 which of course is basis Friday, the day of the lousy jobs report. The banking cartel provided a lot of non backed paper gold trying to suppress its rise. The front delivery month of June saw its OI fall from 5442 to 4257 for a loss of 1185 contracts. We had deliveries on Friday of 980 so we lost 205 contracts to fiat settlement. In the body of the commentary I will reveal to you astonishing data which seems to suggest that all the comex gold and silver are settled by paper.

The next front month for gold is August and we saw the OI rise from 331,378 to 336,027 which is quite normal as we quite away from first day notice for the August contract. The estimated volume at the gold comex today was 105,382 which is quite tame. The confirmed volume on Friday, was very good at 160,386.

And now for silver:

The total silver comex OI fell by 1683 contracts to 121,606 from 123,289. Silver OI seems to be trading within a small band hovering around 121,000 contracts.

Mysteriously the front options expiry month for June saw its OI rise again from 157 to 172 for a gain of 15 contracts. There were no deliveries so the gain will increase the amount of silver standing.
We have witnessed the front options delivery month go from 115 to 187 and then back down to 157 and then back up to 172 all with zero deliveries of silver. Go figure!!

The next big delivery month for silver and this will have all eyes focusing on this is July. The OI for July fell by 2284 contracts from 57,094 to 54,810 contracts. We still have 3 weeks to go before first day notice.
The estimated volume at the silver comex today was very tame at 57,736. The confirmed volume on Friday was much firmer at 84,565.



Here is the chart for 6/7/2011 regarding deliveries and inventory changes at the comex. This is for the June delivery month in gold.






Gold Ounces
Withdrawals from Dealers Inventory nil
Withdrawals fromCustomer Inventory nil
Deposits to the Dealer Inventory nil
Deposits to the Customer Inventory nil


No of oz served (contracts) today 15400 (154)
No of oz to be served (notices) 410300 oz (4103)
Total monthly oz gold served (contracts) so far this month 335,4200 (3542)
Total accumulative withdrawal of gold from the Dealers inventory this month nil
Total accumulative withdrawal of gold from the Customer inventory this month 10,205





Let us begin with gold.
We witnessed zero activity in gold. This is polar opposite to silver which you will see shortly.
The only transaction was an adjustment whereby 796 oz was removed from a customer's inventory.

The comex folk notified us that we had a total of 154 notices filed for delivery or 15400 oz of gold.
The total number of notices filed so far this month total 3542 for 354200 oz of gold.
To obtain what is left to be served, I take the OI standing for June (4257) and subtract out today's deliveries
(154) which leaves with with 4103 notices to be served upon or 410300 oz of gold.

Thus the total number of gold oz standing in this delivery month of June is as follows:

354,200 oz (already served) + 410,300 (oz to be served) = 764,500 oz.(23.78 tonnes)
Yesterday we had a reading of: 785,000 so we lost more to paper fiat.




And now for silver:


















Silver Ounces
Withdrawals from Dealers Inventory 429,567 (Brinks, Scotia0
Withdrawals from Customer Inventory 157,075 (Brinks, Scotia)
Deposits to the Dealer Inventory nil
Deposits to the Customer Inventory nil
No of oz served (contracts) today nil (0)
No of oz to be served (notices) 860,000 (172)
Total monthly oz silver served (contracts) so far this month 915,000 (183)
Total accumulative withdrawal of silver from the Dealers inventory this month 429,567
Total accumulative withdrawal of silver from the Customer Inventory this month. 1,368,765





Today we witnessed a massive exodus of silver from the silver vaults.
As Zero Mostel would say: where there is smoke there is salmon!!"
The fires are burning at all registered vaults.


The dealer saw two massive withdrawals of silver:


1. 375,781 oz from Brinks.
2. 53,786 oz from Scotia.


total silver leaving the dealer: 429,567 oz.


The customer saw this silver leaving their vaults:


1. 155,082 oz leaving Brinks customer vault.
2. 1993 oz leaving Delaware.


total customer silver withdrawal: 157,075 oz.


The adjustments were also fierce:


There were two adjustments and both saw the dealer lose silver to the customer by way of an adjustment:


1. 438,708 oz (dealer to customer) HSBC
2. 5,137 oz (dealer to customer) Scotia.


total adjusted out silver: 446,845


total registered silver at the comex has now fallen to an all time low of 28.773 million oz.


Surprisingly for the 3rd day in a row we had zero notices filed for delivery. Thus the total number of notices remain at 183 for 915,000 oz.
To obtain what is left to be served upon I take the OI for June ( 172) and subtract out the deliveries for today (zero) which leaves us with 172 notices or 860,000 oz


Thus the total number of silver oz standing in this non delivery month is as follows:


915,000 oz (already served) + 860,000 oz (to be served) = 1,775,000
we had 1700,000 oz on Friday so we gained back what we lost on Friday.


end


Let us now proceed to our ETF's SLV and GLD and then our physical gold and silver funds:
Sprott and Central Fund of Canada.


The two ETF's that I follow are the GLD and SLV. You must be very careful in trading these vehicles as these funds do not have any beneficial gold or silver behind them. They probably have only paper claims and when the dust settles, on a collapse, there will be countless class action lawsuits trying to recover your lost investment.








First GLD inventory changes: June 6.2011 :


Total Gold in Trust
Tonnes: 1,212.87
Ounces:38,994,859.03
Value US$:
60,377,085,905.50



Total Gold in Trust:


June 4.2011
Tonnes: 1,212.87
Ounces:38,994,859.03
Value US$:
60,028,109,525.60


June 2.2011:

Total Gold in Trust
Tonnes: 1,212.87
Ounces:38,994,859.03
Value US$:
59,785,707,149.22





Total Gold in Trust;June 1.2011:




Tonnes: 1,212.87
Ounces:38,994,859.03
Value US$:
59,785,707,149.22




We neither gained nor lost any gold in the GLD ETF's for each of the past 4 trading days.

















Now let us see inventory movements in the SLV:


June 6.2011:





Ounces of Silver in Trust 317,822,982.300
Tonnes of Silver in Trust 9,885.40

June 4.2011:
Ounces of Silver in Trust 317,822,982.300
Tonnes of Silver in Trust 9,885.40

We neither gained nor lost any silver today.


Let us head over to our closed physical funds that we follow: the Central Fund of Canada and Sprott's gold and silver funds:







1. Central Fund of Canada: it is trading at a negative 2.1 in usa funds and negative 1.9 for Cdn funds.
June 6.2011
2. Sprott silver fund (PSLV): Premium to NAV fell to 15.83% positive NAV (June 6 .2011
3. Sprott gold fund (PHYS): premium to NAV fell slightly to a positive 3.64% to NAV (June6.2011)




end.


Max Keiser in his weekly video broadcast had J.S. Kim from Thailand discussing the comex settlements. He alerted the world that almost 99% of all gold contracts and silver contracts are paper settled. He discusses that in 2005 the comex allowed paper settlements as long as physical was somehow attached to the paper claim. There are two kinds of these paper settlements;


EFP (exchange for physical)
EFS (exchange for physical swaps.)


In essence the settlements were using SLV and GLD.
Originally the paper settlements were tiny. However in the past 4 months, the entire
settlements have been in paper SLV and GLD.


For the month of May in gold:


The settlements have been as follows:


1. cash .01%
2. physical settlements only .27%


3. 78.22% Exchange for Physical receipts.
4. 21.5% Exchange for Physical swap receipts.


total paper: 99.72%


For silver:


1. cash .19%
2. for physical delivery: .93%
3. EFP (exchange for physical) = 85.39%
4. EFS (exchange for physical swaps+ 13.49%


total paper settlements in silver: 98.88%


This is very alarming but explains everything that has been happening in silver and gold.
It will explain why there is no gold and no silver entering as a deposit.
It will explain why the OI is falling without delivery notices.


In other words, ladies and gentlemen, the comex is one big massive fraud as everything is paper settled with another fraudulent vehicle the SLV and GLD.


I will attach the entire article and I the video. I urge you to read this the paper and watch the video.
I have to leave to bring by grandson back home.
I will continue my commentary and it will be marked updated.


Banker Manipulation on Gold and Silver: JS Kim with Max Keiser:


Please find below my interview with Max Keiser and our discussion regarding the Greek crisis and continued banker price suppression and manipulation schemes executed against gold and silver to prop up the US dollar and prevent a US dollar collapse. Max raises the issue of the European Parliament’s move to accept gold from EU nations as collateral as reported on Zero Hedge here, which I believe is a step towards making gold acceptable as money for the purposes of debt repayment. However, this step is nothing new as Bankers have long been known to make loans in weak currencies and demand repayment in much stronger currencies before, even when dealing with fiat currencies. For example, the World Bank, which has long dispensed loans in US dollars to struggling nations, started a program in the early1990s whereby it asked nations to repay their USD loans in local currencies, fully aware of the fact that the US dollar was falling against many global currencies very rapidly. The World Bank aggressively instituted this “we lend you money in junk US dollar fiat currency and repay us in better currency” program in 15 different currencies in the early 1990s and aggressively pushed it further in the 2000s. So it is no surprise at all that the European Parliament has extended and refined this World Bank program for their own use into a “collateralize your debt with real money (physical gold) but continue to take out loans in our junk fiat currencies”.


I also discuss the shenanigans of the gold/futures silver market with Max. Here is the link to the evidence and the letter I sent to CFTC Commissioner Bart Chilton in late summer of 2008 of Banker fraud in the gold futures markets and his reply to me. Mr. Chilton replied that the enormous arbitrage opportunities daily for several months in the summer of 2008 of $20, $30, $40 and $50 an ounce higher prices of gold futures in Asia versus the New York COMEX was due to Chinese banker manipulation of gold prices higher and not due to Western banker manipulation of gold prices lower. You can read, in that same article, my further line of questioning of Mr. Chilton’s response that went unanswered by the CFTC. Furthermore, I discuss with Max the recent shenanigans in gold and silver futures markets where nearly 99% of all daily transactions for the month of May, 2011 consisted of paper for paper swaps in the form of EFP (Exchange of Futures for Physical) and EFS (Exchange of Futures for Swaps). While at first the Exchange of Futures for Physical transaction may sound legitimate in name, all legitimacy disappears when one realizes that paper may be substituted for the “physical” component of this transaction.


Exchange Rule 104.36 enacted on February 18, 2005, which allows for the substitution of gold ETFs for physical gold, states that the “physical” part of the transaction “need only be substantially the economic equivalent of the futures contract being exchanged” and that “the purpose of this Notice is to confirm that the Exchange would accept gold-backed exchange-traded funds (‘ETF’) shares as the physical commodity component for an EFP transaction involving COMEX gold futures contracts, provided that all elements of a bona fide EFP pursuant to Exchange Rule 104.36 are satisfied. Thus, acceptable gold-backed and exchange-traded ETF funds include, but are not limited to, the iSharesCOMEX Gold Trust (ticker: IAU), which began trading on the American Stock Exchange on January 28, 2005.”


GATA’s Adrian Douglas first brought to my attention Exchange Rule 104.36 in his article, “Commodity Exchanges Can Dump Gold Debts on ETFs”, prompting me to search the CFTC database even further. My search revealed a further amendment to the “exchange of future for physical” transactions enacted onMarch 11, 2005. This amendment stated that “for purposes of this Rule 414, the term ‘Related Position’ [Physical] shall include, but not be limited to, a security [a group or basket of securities], an option, [or] any commodity as that term is defined by the CEA or a group or basket of any of the foregoing. The Related Position [Physical] being exchanged need not be the same as the underlying of the Futures transaction being exchanged, but the Related Position [Physical] must have a high degree of price correlation to the underlying of the Futures transaction so that the Futures transaction would serve as an appropriate hedge for the Related Position [Physical].” This amendment not only opens up PM ETFs as substitutes for the “physical” component of a gold/silver futures transaction but even other metal ETFs or physical metals that have a “high degree of price correlation” to gold and silver.


Furthermore, remember that an EFP transaction can be used to either initiate or liquidate a futures position. Thus, from this amendment, though not specifically mentioned, it is obvious that SLV shares could be used in an EFP transaction to represent the “physical silver” part of a futures transaction. If you look at my below diagram, this may also explain why a huge number of spread positions in the gold/silver futures markets are initiated from time to time in the COMEX. I have illustrated how an EFP in silver futures may work below:





In recent months, the number of EFP transactions in silver AND gold, as opposed to the number of contracts settled in cash or settled in physical delivery, has exploded. When the majority of gold/silver futures contracts are settling in EFP and EFS transactions versus cash settlement or physical settlement, this points to a pronounced manipulation of this market and an absence of any true price discovery in gold/silver futures markets.


ZeroHedge recently reported that JP Morgan was one of the largest owners of the likely bogus SLV ETF, holding 3,600,000 shares as of the end of the 2010 fiscal year calendar. ZeroHedge also reported that bullion banks, in early May, moved 20% of COMEX physical silver out of the registered category that is available to satisfy requests for physical delivery and into the eligible category that is not “eligible” for physical delivery. Scottia Mocatta followed this significant move by transferring 186,000 of their physical silver ounces from registered to eligible as well. JP Morgan, as of the May 27th CME report, held ZERO ounces of registered silver in the COMEX vaults.


In the meantime, selling of SLV shares reached an all time high in May. What does this all mean? I’m not quite sure I have the full answer yet as I keep digging, but I’m quite certain that whatever is going on in these paper for paper swaps in the gold/silver futures markets on the COMEX is not kosher and an attempt to hide physical shortages of precious metals that exist versus the open interest numbers in gold/silver futures. The CME makes it very difficult to compile stats regarding EFS and EFP transactions because while they provide a running total of month-to-date transactions for gold/silver futures contracts settled in cash and settled through physical delivery, they do NOT provide a running total of EFS and EFP transactions month-to-date in their daily metal reports nor do they respond to any requests for such information. When one of my staff members wrote the CME and inquired if running totals were available each month for EFS and EFP transactions in gold/silver futures, the CME staff answered no. Thus, one of my staff compiled the daily totals for EFS and EFP transactions for the month of May by pulling every daily report for gold/silver futures. This is what the totals looked like from May 2 to May 26, 2011.


For gold futures, from May 2 until May 26, 2011, 0.01% of transactions settled in cash, 0.27% in physical, 78.22% in EFP and 21.50% in EFS (for a combined 99.72% of all gold futures transactions in EFP and EFS). For silver futures, from May 2 until May 26, 2011, 0.19% settled in cash, 0.93% in physical, 85.39% in EFP, and 13.49% in EFS (for a combined 98.88% of all silver futures transactions in EFP and EFS). Thus these paper for (possibly) paper swaps, if that is indeed what is happening in the EFP transactions, are casting huge distortions in the price of gold and silver to the downside.









About the author: JS Kim is the Chief Investment Strategist for SmartKnowledgeU, a fiercely independent investment research, education, & consulting firm that helps clients position themselves properly to profit from the ongoing global monetary crisis being executed by the world’s Central Banks. The returns of his Crisis Investment Opportunities newsletter since launch in June 15th 2007 are as a follows. Half a year, 2007: +23.78%; 2008 +3.21%, 2009: +63.32%; 2010: +32.59%; and YTD as of the end of May 2011: +5.79%. Cumulative return since launch to May, 2011: +192.66%
I will continue shortly with part II of my commentary.

[enzyme]

OK...That was way over my head. Care to explain this extremely detailed post into language for all of us who do not know the comex like the back of ones hand. For what I've read: All transactions are all paper. No new Gold or Silver is being deposited. Both metals are leaving the vault. OK so There is a shortage...Or people are taking the rise in price for both metals and liquidating it into another asset class?

[HistoryStudent]

Someday - who knows when? - this fellow will be very right as physical supply LOSES against demand increases to dump FIAT.

[bulloncoins]

When I weigh stories like this against the fact that premiums are sky high, and the mint is about to produce 1 oz silver proofs for a price of $60.00 ($15.00 higher than last year...) and the only way around any of this that I can see is to have a very large sum of money to deal with the big purchases to get any decent discount that even looks close to spot...I do see paper and physical prices breaking down. The more obvious it becomes to everyone, the faster all silver will start to dry up. I don't think many people will have a chance to add to their stacks for much longer, unless you have serious money to spend.

The wagon will keep rolling along, but sooner or later that wheel is going to fall completly off, and when it does...the wagon will stop. We are all feeling the wobble now, and it will not be long. But it will be fast and furious, and more than a few people are going to get hurt really bad.

[CiscoKid]

The wagon will keep rolling along, but sooner or later that wheel is going to fall completly off, and when it does...the wagon will stop. We are all feeling the wobble now, and it will not be long. But it will be fast and furious, and more than a few people are going to get hurt really bad.

Please clarify. Who will get hurt worse, physical holders or paper holders? Or will all of us stackers get the shaft? Sorry if this is a dumb question.

[bulloncoins]

Please clarify. Who will get hurt worse, physical holders or paper holders? Or will all of us stackers get the shaft? Sorry if this is a dumb question.

The only way you could get hurt holding physical is for the government to take it away or make it illegal to own.

People holding paper silver (ETF, Receipts without specific deatils such as serail numbers, etc) are going to get burned bad if they do not dump them before the wheel falls off (comex and London defalts) which I think could happen sooner than later.

[CiscoKid]

The way things are going these days, it just doesn't take too much imagination to think that the .gov will take it away again. They did it once before and I wouldn't put it past them to try again. It is clear that they are willing to raid any accounts out there (exceot for their own of course) to cover for their ineptitude. What's to stop them from declaring that owning gold is now illegal?

[Gcubed]

The way things are going these days, it just doesn't take too much imagination to think that the .gov will take it away again. They did it once before and I wouldn't put it past them to try again. It is clear that they are willing to raid any accounts out there (exceot for their own of course) to cover for their ineptitude. What's to stop them from declaring that owning gold is now illegal?

An "Executive Order". FDR did it.

[REO 54]

The way things are going these days, it just doesn't take too much imagination to think that the .gov will take it away again. They did it once before and I wouldn't put it past them to try again. It is clear that they are willing to raid any accounts out there (exceot for their own of course) to cover for their ineptitude. What's to stop them from declaring that owning gold is now illegal?

Well to be clear,they really did'nt confiscate any gold back in 1933 did they.They did make it illegal however,in this day and age I believe it would only create a thriving black market.

[enzyme]

I do believe only one person was ever prosecuted in the 30's and then that case was thrown out in court. If you think they are going door to door looking for Gold and Silver they might as well put Guns and Ammo on the list too because there would be some pretty upset people.

[CiscoKid]

They wouldn't have to go door to door. All they would have to do is to announce that after a set date owning gold is against the law and all transactions involving gold are illegal and will be prosecuted. People would be urged to bring their gold to a government office and redeem it for two or three hundred an ounce (if they're that generous) by the date required. What are you going to do with all your ounces when nobody wants them because they are illegal? I honestly don't know what I would do in such a scenario. Hold onto it? Why?

[REO 54]

I do believe only one person was ever prosecuted in the 30's and then that case was thrown out in court. If you think they are going door to door looking for Gold and Silver they might as well put Guns and Ammo on the list too because there would be some pretty upset people.

Yep,they go lookin'fer gold and only get lead!

[GOLDZILLA]

T All they would have to do is to announce that after a set date owning gold is against the law and all transactions involving gold are illegal and will be prosecuted.

All you would have to do is get it out of the country before that date.

[CiscoKid]

Good luck with that. Last I checked, Customs inspects packages.

[latemetal]

And now you know what the TSA is getting ready for, the day after that one...

All you would have to do is get it out of the country before that date.

[HistoryStudent]

[/B]

An "Executive Order". FDR did it.

Yeah that really did a number on the 1933 Gold Eagles - one sold for around 7 million dollars in an auction a few years back -

a 350,000 % gain.

Not bad right?

[HistoryStudent]

making stuff ILLEGAL does strange things to the prices.

Take street drugs profits for example, right?


However, the buying power of the US dollar then would drop from 73 ish to a world record low for the reserve currency.

Who knows how low from worth less to worthless?

[Gcubed]

Yeah that really did a number on the 1933 Gold Eagles - one sold for around 7 million dollars in an auction a few years back -

a 350,000 % gain.

Not bad right?

Not bad at all. Certainly not in the same slum class as say, First Spouse's?

[Irons]

They wouldn't have to go door to door. All they would have to do is to announce that after a set date owning gold is against the law and all transactions involving gold are illegal and will be prosecuted. People would be urged to bring their gold to a government office and redeem it for two or three hundred an ounce (if they're that generous) by the date required. What are you going to do with all your ounces when nobody wants them because they are illegal? I honestly don't know what I would do in such a scenario. Hold onto it? Why?

I would grind it into dust and scatter it over 18 miles of reservoir before I gave the .gov so much as a grain.

[Sheepdog]

I would grind it into dust and scatter it over 18 miles of reservoir before I gave the .gov so much as a grain.

or tell them you went fishing with the metals and a storm came up and the mighty ship was lost! 10 miles off the coast. Go look for it yourself!

[bulloncoins]

I would grind it into dust and scatter it over 18 miles of reservoir before I gave the .gov so much as a grain.

Ezekiel 7:19

"They will fling their silver into the streets and their gold will become an abhorrent thing; their silver and their gold will not be able to deliver them in the day of the wrath of the LORD. They cannot satisfy their appetite nor can they fill their stomachs, for their iniquity has become an occasion of stumbling. "

[JayDubya]

I would grind it into dust and scatter it over 18 miles of reservoir before I gave the .gov so much as a grain.

That is, if you could get it off the bottom of that damn lake.....

[Not Sure]

They wouldn't have to go door to door. All they would have to do is to announce that after a set date owning gold is against the law and all transactions involving gold are illegal and will be prosecuted. People would be urged to bring their gold to a government office and redeem it for two or three hundred an ounce (if they're that generous) by the date required. What are you going to do with all your ounces when nobody wants them because they are illegal? I honestly don't know what I would do in such a scenario. Hold onto it? Why?

LOL

The Federal regime declares marijuana is "illegal" and millions of people grow it nationwide. Gold and silver will never be "unwanted" because the satanic Federal regime declares God's money is "illegal."

[GOLDZILLA]

I would grind it into dust and scatter it over 18 miles of reservoir before I gave the .gov so much as a grain.

Or throw it over the wall into Mexico where it would do more good.

[anywoundedduck]

That is, if you could get it off the bottom of that damn lake.....

That is true. I think most of us here have lost our stash in various boating accidents. Too bad.

[Irons]

That is, if you could get it off the bottom of that damn lake.....

Prolly sunk in the mud by now and the river channel silted it over!~

[Malus]

Ezekiel 7:19

"They will fling their silver into the streets and their gold will become an abhorrent thing; their silver and their gold will not be able to deliver them in the day of the wrath of the LORD. They cannot satisfy their appetite nor can they fill their stomachs, for their iniquity has become an occasion of stumbling. "

Well, make sure everyone throws it my way. I'll take the "worthless" metal over bible prophesies any day.........

[Ragnarok]

If I understand this story correctly, someone(s) has been replacing/exchanging physical gold and silver at the Comex with/for paper (shares of GLD,SLV), and for quite some time.

R.

[jogslvr]

Good video explanation of COMEX warehouse shortage: 6/14/11

http://www.kitco.com/ipmijune2011/

[REO 54]

COMEX: The March to Irrelevance.......

Divergence between paper gold and physical gold price is happening, the process begun. Actual physical shortages have kept the price up. The naked shorting of futures has kept the paper price down. The fraud cases and lawsuits, with no hint of prosecution, provide the levered force to create much wider divergence, as traders and entire firms depart the tainted crime scene that is the COMEX.

Trust has vanished along with private accounts. At the center of the backdrop for the divergence, apart from the criminal events, is the economic deterioration and asset market downdraft. It leads to margin calls, loan payment obligations, fading investor confidence, negative sentiment, and a desire to avoid loss. Hence the huge liquidity concerns, selling of good assets that command a strong price, and central bank encouragement of gold sales even with lease.

These forces conspire to push down the gold futures price from the discovery process, called the paper gold price. These forces, although real, are exaggerated by the Syndicate to explain all. On the other side is the desperation among central bankers to cover debt securities up for sale or rollover funding. They resort to utter hyper inflation by monetizing the many types of government bonds. They are obligated to aid their banker cohorts, and thus purchase truckloads of badly impaired sovereign bonds and other collateralized bonds. Over time these sovereign bonds have proved toxic. The compelling need to stimulate economies, to redeem toxic bonds, and to recapitalize and nationalize the big banks adds to the monetary inflation outcome. Therefore, two sides are in opposition in a battle to the death of one or the other. No middle ground can be achieved, not any longer. It is the quintessential battle between monetary hyper inflation and restoring bank system integrity to avert collapse. The insolvency has recently met illiquidity. The battle features strong forces on each side. The divergence between physical and paper gold price is widening.

The incurable speculator junkies committed to the addictive leveraged game rigged by the Forces of Evil seem stuck at the casino tables, where fingers are lost, finally entire hands and arms. If their practice was to purchase physical, they could benefit from the paper price swoon, and join the Forces of Good team, rather than fighting the evil side on their dominated turf. To be sure, many aware analysts in the news maintain a small gold position in COMEX that is rolled over constantly. Many have physical positions but keep with the paper trades as a hobby, better described as an addition to the juice. Leverage cuts both ways. Their continued activity has left them exposed to theft, while knowing the criminality was widespread within the arena. So many players and firms are departing the arena altogether like Ann Barnhardt of BCM Capital. The divergence between physical and paper gold price is widening.

The desperation of the bad team is growing. The gold cartel has benefited significantly from the fresh Libyan gold supply (144 metric tons) and Greek gold supply (111 metric tons), not to mention the ample Dollar Swap Facility. It is the bankers New Gold, as reported by intrepid Jeff Neilson. In a fresh sign of bankster desperation, the lease rates for gold have been pushed down to net negative levels. The fresh supply from the two broken nations has greatly aided the COMEX, providing new cannon fodder. Perhaps more wars to liberate the oppressed can be conjured up, to release more tyrant wealth. It is not a coincidence that negative gold lease rates came when Libyan gold was made available (heisted) and when Italian sovereign bonds went into critical DEFCON mode. The gold supply helped to aid the lack of bond demand. The gold lease story is analyzed more fully in the December Hat Trick Letter.

Inelasticity Blemish
A preface is warranted. The paper Gold market is very different in its internal dynamics from the physical. The paper Gold market shows signs of inelasticity that borders on comical. Witness the low demand in 2001 and 2002 when Gold had a paper price tag at $300 or less per ounce. Witness nowadays the amplified selling when the paper price declines. The leverage from the corrupted paper mechanisms forces margin pressures and sales. The leveraged game goes opposite to the real world of price mechanisms. On the upside, global demand rises with a rising physical price, called the gold fever. The inelasticity on the supply side is prevalent in the paper market, while the inelasticity on the demand side is prevalent on the physical market. To confuse the mix, mining firms realize some inelasticity as price falls, they are stuck with a liquidity crunch on their forward sales ruin. A huge amount of money is required to cover their losses, urged on by Wall Street advisors. Their mining operations suffer from lack of funds, and projects are curtailed. The paradoxical differences in dynamics help to push the gap between the paper and physical Gold price. The incompatible forces work to rip apart the COMEX. The divergence between physical and paper gold price is widening.

Illicit Usage of Client Funds as Collateral
The hypothecation battle will bring sufficient publicity to help the divergence along. As more assets are seen as committed, involved, and tainted in the process of grabbing, snatching, and securing collateral, even by illegal means, the physical assets will be removed from the system. Parties will remove accounts and metal from the COMEX in response from basic self-preservation. On the investment and speculation side, harm has been rendered to managed risk. The client funds have begun to flee. The protection and security of money in private accounts has been under siege in recent weeks since the MF Global crime scene was established and the yellow tape cordon has been put in place. Investors are pulling money out of hedge funds at a rapid rate. The COMEX will be increasingly isolated. Clients funds were redeemed to the tune of $9 billion in October, almost four times as much as they pulled in September, according to Barclay Hedge and TrimTabs Investment Research. Investors in October yanked more from hedge funds, setting a single month high over the last two years.

The redemptions are the largest for the hedge fund industry since July 2009, when $17.8 billion was returned. The Barclay Hedge office put lipstick on the corrupt pig by commenting on how investors have lost patience with lackluster investor returns. To be sure, the average hedge fund is down by about 4% this year. The global hedge fund industry size has been reduced to $1.66 trillion, still sizeable. It is always interesting, if not amusing, to read the spin from the isolated corners. Hedge funds are seeing capital depart for the simple reason of moving away from crime centers. In the process the COMEX is being isolated. With increased isolation comes the easily recognized fraud. Look for some major stories soon about the raids to the GLD and SLV inventories by their custodians engaged in naked shorting. The Exchange Traded Fund fraud story is analyzed more fully in the December Hat Trick Letter. The divergence between physical and paper gold price is widening.

Dynamics of Paper Versus Physical Basis
Grand divergence dynamics are becoming clear. Ann Barnhardt explained in detail how the COMEX will go away. It will not default, but rather fall into irrelevance. He laid it out in credible detailed form with numerous factors coming to play. The COMEX might still suffer the shame and spotlight of criminal prosecution. It will more certainly suffer from being ignored and shunned. The physical basis market will not respond to the declines in the paper futures market. The current dominant market will go away due to lost integrity and eroded trust. The consequences and implications of the recent major scandal and coverup are enormous, staggering, and sweeping. The changes from the MF Global failure and theft of private segregated accounts will come in time, perhaps accelerated by another similar event to slam the message home. The Syndicate has turned desperate, resorting to theft in the open daylight, which has resulted in direct consequences. Hundreds of COMEX clients waited in line for delivery of gold, and had their wallets stolen by JPMorgan. Their Gold & Silver set for delivery found its way into JPMorgan accounts at the COMEX. The details of the missing silver then reappearing silver is discussed in the December Hat Trick Letter. The slow mentally overlook this fact. The alert who point to fraud consider it a smoking gun. On its face, evidence mounts that JPMorgan simply converted 614k ounces of MF Global client silver into JPM licensed vaults. Big hats off to the Silver Doctors for excellent financial fraud forensic analysis. Do not expect prosecution over the crime, for MF Global, for JPMorgan, or for the accomplices in London, not even Jon Corzine. The Fascist Business Model in the Untied States does not permit prosecution. The bigger the crime, the more likely the perpetrator is in control of the government high offices, the financial ministry, the printing press, or the regulators.

Ann Barnhardt explained how the COMEX will fade away into oblivion. Its final chapter will be marred by a grand price divergence, where the futures market price declines from shunned avoidance, while the cash physical market price holds steady then rises. Many including the Jackass had thought that a slew of delivery demands would force a drain in their gold & silver inventory, eventually leading to a slew of lawsuits, together to shut them down as a corrupt enterprise arena. The MF Global theft reveals the alternative route that seems more clear. The gold cartel led by JPMorgan and secretly by the USFed will not go quietly. They have resorted to theft of private accounts on the open stage. The money is not missing. That is the lie. It is held in JPMorgan accounts in London, where fraud laws are more relaxed. We have seen this Madoff movie before, but it will be shown on the silver screen again. The divergence between physical and paper gold price is widening.

Financial Sense Newshour: Ann Barnhardt: The Entire Futures/Options Market Has Been Destroyed by the MF Global Collapse

The backlash has begun and will gain strength. Barnhardt offered many cogent arguments with detail on how the COMEX will be ignored from distrust and suspicion of further thefts, as clients remove funds and close accounts. Here are her main points. They apply to Gold & Silver. She has the Barnhardt weblog.

Arbitrage is set to kick in. Players will buy at the cheaper corrupt paper market in COMEX and sell in the higher honest physical market, wherever brokers can match to make deals. (It is the same phenomenon that ripped the Euro sovereign bond market apart, as the German Govt Bond yields remained much lower than the Spanish and Greek.) They will take advantage of a strong basis, buy at the discount offered by COMEX, and sell into the cash spot physical market.
A linchpin holds the market together. Keeping the futures markets tied to the underlying cash physical market is the fact that the futures contracts permit taking delivery. That delivery mechanism just broke as linchpin in full view. The futures market has lost viability and trustworthiness because of the MFG collapse and theft.
The entire delivery mechanism has been corrupted and undermined. Taking delivery has meant a holding of physical metal bars is stored in a certified vault with your name attached. No longer are such holdings considered safe. Thefts occurred, and lawsuits have occurred to decided upon ownership of bars in dispute.
The de-coupling process comes when arbitrageurs finally lose all confidence in market interaction dynamics, as the cash market will lose connection on price from the futures market. Players will not be willing to take the risk of having their money, positions, and physical metals stolen or confiscated.
As players flee the futures market, the paper futures prices will decline. The cash physical market will hold steady. The divergence will come and be noticed, then be widely publicized. The players will realize that the physical market is the only remaining game to be played with honest rules in effect. The cash dealers will ignore the futures prices, no longer a valid price discovery, seeing that market demand for their physical inventory is robust, and maintain their prices steady. Later, they will even raise the physical prices. Then later still, the parabolic spike comes for physical Gold & Silver.
The Great Shun By Miners
Asset management funds are appealing to mining firms for direct metal supply. They are bypassing the COMEX in a new trend. It is a natural development, as miners seek a fair price and the funds seek a reliable supply. The COMEX is cut out of the process. The Sprott Funds have revealed how they sourced their precious metal from mining firms last year. The official exchanges are being cut off, a form of isolation as a result. The divergence between physical and paper gold price is widening.

See the Ashanti story as typical. The COMEX is seeing reduced supply lines, reduced operations, more criminal implications, horrible publicity, and fewer clients. Criminal fraud does that, as lawsuits will follow like cold rain. The trend shapes up well for higher gold & silver prices. Mark Cutifani is CEO of AngloGold Ashanti, a $16 billion mining firm. He said, "Major [asset management fund] buyers are finding it is hard to get physical gold. People are coming directly to us [for large gold purchases,] people who want tonnes of physical gold, people with serious financial muscle, because they are finding it is very difficult to secure the volume of gold they want. That is something we have noticed over the last 18 months, and it has been increasing in the last six months. People are finding its hard to get physical gold." The clear message is that the COMEX has no spare available metal at all.Cutifani has good insights into the commodities and precious metals markets, and describes a fascination new trend regarding the global picture. He pointed out that major gold buyers are emerging from the Middle East and Asia. See the Bull Market Thinking article.

New Markets Flowering
New gold centers are forming, where the safety is most assured. Hong kong and Dubai have emerged as reliable honest brokers, and will continue to provide valid safe haven. Switzerland, London, and other locations are fading fast. They are the corrupt centers where fascism has become prevalent, laced through the financial system.Takahiro Morita, the Japan director of the World Gold Council, reported that Japan's gold exports in the 10 months ended October totaled 95.6 metric tonnes, their highest level since 2008, when it registered at 95.5 metric tonnes. People who bought gold and jewelry in the 1980 and 1990 decades are selling back what they purchased, according to precious metals traders. Japan has turned into a big exporter. Contrast to the official side. Central bank purchases have risen by 114% over the previous quarter. Purchases by central banks could hit 450 metric tonnes this year, concludes the investment research at the council. The volume represents the highest level of central bank buying since at least 1970, perhaps the greatest in recent history. A veteran gold trader with actual experience in these locations pitched in to explain. He said, "These are not sales in Japan. They are exports, an important distinction. Many investors are busily relocating their precious metal bullion to Hong Kong and Dubai UAE. Look for Dubai to be the HK of the Middle East. The Chinese have made that decision, and it is being implemented with lightning speed." Most of the relocation from Japan shows up as exports, which require payments.

October imports into China from Hong Kong rose 50% over September, and up 40-fold from last year. The more attractive fair price paid in Shanghai reached $50 above the corrupt controlled London price. The arbitrage has been very active. Chinese gold imports from Hong Kong hit a record. The Financial Times reported Chinese gold imports from Hong Kong hit a record high in October and astoundingly, they accounted for more than one quarter of the entire global demand. Data showed that China imported 85.7 tonnes of gold from Hong Kong in October, up 50% from the previous month and up more than 40 times from October of last year. It marks the fourth consecutive month that China's gold flows from Hong Kong have hit new highs. The article noted that the price arbitrage between London and Shanghai was favorable for Chinese imports during late September and early October, giving astute clever traders an edge. Gold on the Shanghai Exchange traded up to $50 per ounce above the main global market based in London, a record price difference. Purchases from China have fallen since October, as the recent strength in the USDollar has made gold more expensive. Also, considerable new strain has been felt inside China in recent weeks. Conclude that price arbitrage has begun to show itself across international boundaries. The divergence between physical and paper gold price is widening.

One Gold Event, The Big Squeeze
No gold chart will be shown in this article, out of disrespect deserved for the COMEX criminal activity. A story was recounted in recent days from my best source of solid reliable gold information. The aware gold community has overlooked a phenomenon that might be more profound in action here and now. A major squeeze is on that capitalizes on the artificially low COMEX price and the higher honest physical price. The Barnhardt effect can be seen, or at least recounted. A gold trader informed that some multi-$billion purchase Gold orders have been in the process of filling at or near the $1600 price per ounce. The price must remain near $1600 to complete the orders and permit them to clear. Call it Agent2000 who seeks the massive amount of Gold, one of the Good Guyz. The name fits since their goal is to force the Gold price back over $2000/oz after the sale transaction clears. Since so large, the orders take time to fill completely. The low-ball buy orders have been filling for over two weeks. At the same time, the Agent2000 buyer has enlisted the aid of numerous assistants to push down the paper Gold price by putting extreme pressure on some bad players, some nasty types from the usual list of suspects in the Western banking sector. These bankers are being squeezed out of their gold, as they contend with deep insolvency, reserves requirements, falling sovereign bond values, depositors exiting, and more. They are players in what has been widely called the Gold Cartel. The Jackass term has been applied in a wider sense, as they have been part of the Syndicate that reaches into the Wall Street banks, the defense contractors, news media, and big pharma.

The other side of Agent2000 is where additional intrigue lies. He (they) have buyers lined up on the physical side some deals ready to close at $1900 per ounce. Later the price will push over the $2000 mark. The buyers are ready. One must infer that the buyers have a great deal of money ready to devote to the battle. Maybe some is piled up to escape the clutches of the cartel, removed from the system. Maybe some is piled up at a major new slush fund to do battle with the cartel at their own game. Maybe some is piled up and kept out of sight from greedy hands in government officials, like off-shore in the Caribbean or sequestered in the Persian Gulf. This story might be perplexing to many in the gold community since the Good Guyz are pushing down the Gold price in order to facilitate a gigantic order that will work toward crushing the cartel by draining their gold. Their gold cannot be drained without the completion of a great many orders. It is only natural to attempt to achieve the lowest possible price. If the gold cartel insists on pushing the price down, then they open the door for major volume sales at the artificially low and very much bargain price. It is happening, but the gold community does not enjoy the symptoms of the process.

So a huge huge huge buyer of gold is busy, and a multi-$billion order is working through. The buyer demands a $1600 price, while on the other side of the table Agent2000 has a sale lined up for the same metal at a $1900 price on physical. The trade will take gold bullion from the Bad Boyz hands and put it into the Good Guyz hands. In the process, the COMEX supply lines will be drained more. This is consistent with mining firms removing supply lines to the COMEX. The Agent2000 buyer is pushing price down, squeezing some evil parties hard, crushing testicalia along the way. He (they) describe to the distressed seller at $1600 that pressures will continue until the deal is closed. The seller is in tremendous pain with open distress showing. So many assume the Bad Powerz are pushing down the Gold price. Not so!! This event and transaction displays how some pain comes in many isolated cases of Good Guyz pushing the Gold price down to empty the Bad Powerz vaults. My source would not reveal the identity of Agent2000 or the location of the squeeze. It seemed like London. The money is not exclusively coming from China. Word has it that Russia is also applying the pressure, with some Chinese teamwork. The Competing Currency War has a new major flank. The divergence between physical and paper gold price is widening.

London Trader Discusses The Great Raid
Several months ago, the anonymous London trader offered some ripe information about the Chinese accumulating gold bullion from the major metals exchanges. He is back to offer an update. He made some extremely important comments, dense in the message. He said the following on King World News. He begins with a controversial claim that adds credence to what has been reported for a long time, the fraud of the major Exchange Traded Funds. These corrupted funds will be gutted before the clients are informed of owning no metal, and forced redemptions in cash. The COMEX isolation is occurring in full glory, a process well on course.

'The Chinese have continued to take delivery of both physical gold and silver directly from the ETF's GLD and SLV. They are also going directly to producers. Entities are bypassing the COMEX altogether and going straight to gold mining companies. Every single month producers have a certain amount of gold and silver they sell. Normally they sell it to the bullion banks and the bullion banks, of course, leverage this gold and sell up to 100 times that in paper markets to control prices. The bullion banks hold that little bit of physical gold and claim they are backed up on their position to the CFTC. I have all my large buyers now going to producers and saying to them, 'Look, don't sell it to the bullion banks, we will buy it from you.' So we are buying directly from the producers and this includes some sovereign entities which are doing the same thing. We are struggling to get the physical out of these producers because they have so many people banging on their door, saying, 'Sell it to us Direct.' What these buyers are doing is essentially taking gold out of the system, which means the bullion banks cannot leverage that gold anymore. So this is a huge, dynamic shift that was not there before. These buyers are now cutting off future gold supply from the bullion banks.

This is a huge tectonic shift in price dynamics going forward because it is taking price discovery away from the bullion banks. These large Chinese buyers and sovereign entities which are doing this are going to have a massive impact on the market. Interestingly, so many people are bearish on gold right now and looking for a collapse in the price of gold. They do not understand what is happening in the physical market. The bullish fundamentals just described to you have enormous implications. We are making a historic bottom right now. The paper gold, or virtual gold market, has diverged so far from the physical market that it is no longer a credible marketplace. That is the key thing that came out of a very important meeting I was in yesterday where we had some serious players. The people I was meeting with are all on the buy side and have been since the lows last week. There are massive physical orders, sitting, waiting for any more discounts, and yet everyone else seems to be short. So you have huge fuel for a rally here. You have to keep in mind this recent plunge was orchestrated with borrowed gold and that borrowed gold is now gone. That is why gold cannot go much lower. Any dips in price will be aggressively purchased. Right now we are witnessing a historic bottom." The divergence between physical and paper gold price is widening!

Jim Willie CB is a statistical analyst in marketing research and retail forecasting. He holds a Ph.D. in Statistics. His career has stretched over 22 years. He aspires to one day join the financial editor world, unencumbered by the limitations of economic credentials. Visit his free website to find articles from topflight authors at www.GoldenJackass.com

www.goldenjackass.com

http://www.silverbearcafe.com/privat...relevance.html

[Irons]

Ya mean paper gold and silver ain't real??? Say it isn't so!~

[REO 54]

Ya mean paper gold and silver ain't real??? Say it isn't so!~

If they would make those Certificates as soft as Charmin,it actually might have a use!

[HistoryStudent]

http://www.soviethistory.org/index.p...e&navi=byTheme

Study history

Happy New Years Day

[HistoryStudent]

Education is repetition study study study

[Ragnarok]

I predict eventually they'll save one gold bar and one silver bar in a display case at the Comex just so they can say "No problems here, look, we've got metal, nothing to see here, move along..."

R.